Downgrading Does Not Mean Failure: Ways to Save Money


        Sometimes it can seem impossible to save money. I mean with rent/mortgage, utilities, other bills, and let’s not forget paying off debt, how are we even supposed to have extra money to save? Well, it’s not as impossible as you may think. There are the obvious options: get a second job, try to get a higher paying job, or find ways to make money on the side. But these options may not always be viable. Getting a second job may not be possible for people with children without considering additional child care services; which is just another added expense. Getting a higher paying job may take some time as you gain the experience you may need to move up; you may even have to go back to school for a degree or certification. Finding ways to make money on the side may be a little easier depending on your skill set, but it still requires time and effort. So what are some other ways to save money? In one of my previous posts 5 Easy Ways to Lower Your Monthly Expenses from Your Couch, I laid out some ways you could lower your monthly expenses to help save money but sometimes more substantial changes are needed to help give a major boost in the savings game. Sometimes a downgrade can put you on the fast track to financial freedom.

        Now I understand in our consumer-driven economy, we’re taught to ‘Spend, spend, spend!’, ‘bigger is better’, and if it costs more it must be nicer, so the thought of downgrading may make you feel a little uneasy; like you have somehow failed. But trust me—this is not at all the case. Four years ago, I decided to downgrade my apartment and it was one of the best decisions I could have made for myself at the time. I was living in a very aesthetically pleasing one-bedroom apartment. I’m talking about white walls, built-in bookcase, fireplace, balcony, jacuzzi-style bathtub, valet trash... I’m not gonna to lie, it was nice, but it was expensive.The rent was a little over $1,500/month with the cost increasing every year. I knew I wanted to start tackling my debt but did not want to have to sacrifice or neglect contributing to my savings to do so. At the time, the only way to do this was to lower my monthly expenses but I knew small cuts would not be enough, so I decided I would need to make a more substantial change—I would need to find a cheaper place.          

 

        The search took awhile. Mostly because even though I wanted to find a place with cheaper rent, I did not want to inconvenience my commute to work nor compromise my safety (I mean, it doesn’t matter if you’re saving a few hundred bucks on rent if you’re afraid to leave the house after dark or worried your car won’t be there in the morning).

        I finally found my current residence, a one-bedroom apartment that is actually a little bigger in size than my old apartment but without a lot of the amenities I had before. However, it did not alter my commuting time or cost by much and it is in a pretty quiet neighborhood. For me, it was a win-win situation and it was saving me about $200 per/month ($2,400 per/year), which was money I could now direct to my savings.

        On moving day, I asked a few friends and family members to help me out. For one family member, it was his first time seeing both my old and new place. During the move he gushed over the old place, again aesthetically the place was nice as hell, and upon seeing my new place he joked that my ‘credit score must have dropped.’ I laughed because I didn’t think his comment was mean-spirited or coming from a bad place; he just didn’t understand the bigger picture of why I was making this move. However, someone else may have taken the comment to heart thinking or felt like they somehow had failed. I knew the true reasoning behind my move; I wanted to tackle debt and save money at the same time and this move was going to allow me to do that. This is why I titled this post ‘Downgrading Does Not Mean Failure’, because even if others perceive your downgrade as something negative, just remember, that they don’t know the full picture and quite honestly they don’t need to. You know your financial goals and what you need to do to achieve them. So, don’t let others' perceptions hinder you or make you doubt your journey to financial freedom.

        

        Therefore, if you are in a situation where you’d like to start saving more money and are in a place to make substantial changes, here are a few suggestions on downgrades you can make that can save you big:

  • Move to a cheaper place - This on average can save you a few hundred bucks a month. However, make sure to calculate the entire cost before you commit. Make sure the money you are saving in rent isn’t going to end up costing in another aspect. For example,
    • If you save $150 per/month by moving into a cheaper place but the place is further away from your job so your commuting cost increases by roughly $150 per/month, well then you really haven't saved anything;
    • Or, if your rent is $1,500 per/month with utilities included but you find a place that’s $1,300 per/month but utilities are not included, then you need to make sure that your utilities aren’t going to cost you $200.

  • Get a roommate or two - If finding a cheaper place doesn’t appeal to or work for you or you’re looking to save even more, consider living with roommates. If you can find a reliable person or a group of people, this may be a great option for you. Think about it. Most two-bedroom apartments only cost a few hundred dollars more than a one-bedroom. So let’s say in this example you find a really nice apartment complex in a great area, but the rent for a one-bedroom is about $1,800. Ouch! That’s pretty high. However, the rent for a two-bedroom in the same complex is roughly $2,200. Still pretty expensive. But if you were to find a roommate to split the cost with, then you would only be paying $1,100 to live in the complex. That’s a savings of $700 per/month.
  • Get a more cost efficient car - I know most people want to have the hottest and/or newest car on the lot. However, with the car note, gas, insurance, and general maintenance the price of having a car can end up costing you greatly.
    • Do you own a ‘gas guzzler’ that drains your wallet every time you're at the pump?

    • Do you spend a lot of time at the mechanic because your car is in constant need of maintenance?
    • Is your car note the same price as some people’s rent?
  • If so, you may want to consider getting a more cost-efficient car, especially if you are prioritizing saving money. Remember, your car’s value decreases around 20% to 30% by the end of the first year and as a rule of thumb, in five years, cars lose 60% or more of their initial value. Because of this, throwing a lot of money into vehicles may not be worth it. This is why it’s always a good idea to do a little homework before purchasing a vehicle; it is worth the time and effort, especially on a commodity where the value depreciates as soon as you drive it off the lot.

  • Consider selling your car if public transportation is sufficient for your needs - Now, depending where you reside, owning a car may not even be worth it. In certain larger metropolitan areas, owning a car can be more of a hassle and a financial burden with limited parking and high monthly or yearly garage or storage rates. If you are able to commute to work and run a majority of your errands without the need for a vehicle, you may want to really consider if having a car is worth the expense.

        Remember, everyone’s journey to financial freedom is different. These suggestions may be something you’re able to use or they may not. But knowing that there are lots of options you can take to help out on your path is part of the journey. If you have made significant changes to help save substantial amounts of money, I’d love to hear about them. Leave a comment below. It may really help someone else on their journey.

 

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Comments

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